Greece May Sell Last Telecom Stake to Deutsche Telekom

By Alkman Granitsas 

ATHENS--Greece is considering a proposal by German telephone company Deutsche Telekom AG to buy the last 10% stake in its former telecom monopoly, something that would bring desperately needed cash into Greece's sputtering privitization program.

However, discussions remain at a very early stage, said a Greek government official familiar with the proposal, and any agreement will depend on the sales price.

The German company already controls 40% of the Hellenic Telecommunications Organization SA, Greece's one-time state telephone company, which continues to dominate the country's local telecom market and is a leading player in southeast Europe. Under the terms of a 2008 agreement signed with the government, Deutsche Telekom has the right of first refusal to buy the government's remaining stake in OTE should it decide to sell.

"Clearly the Deutsche Telekom proposal is of interest to us. OTE is part of the government's privatization drive," said the official. "There is interest from both sides, but the discussions are very preliminary and we are at the very beginning of the process."

According to the official, the proposal was floated during a meeting this week in Athens between Greek Prime Minister Antonis Samaras and newly-appointed DT Chief Executive Officer Timotheus Hoettges. A local Greek newspaper first reported the offer late Thursday, but DT has declined to comment on the report.

The German telecom company has spent about 4 billion euros ($5.4 billion) building up its position in OTE, paying top dollar--close to 30 euros a share--with its first purchases in the Greek carrier. Since then, OTE's shares have tumbled in line with Greece's broader stock market, trading at only a fraction of their former price.

On Friday, OTE shares closed about 3% higher at EUR10.80, buoyed by reports of the DT offer. Greece is hoping to raising 3.56 billion euros this year from privatizations. At the current market price, the government's 10% stake in OTE would be valued at about EUR530 million, according to market data.

Archibald Preuschat in Frankfurt contributed to this article.

Write to Alkman Granitsas at [e-mail]

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